Innovative Components is the largest manufacturer of plastic clamping knobs and handles in North America, and also produces a broad line of spring loaded and quick-release hardware, as well as wire rope lanyards and the Thread Detective© thread identifying tool. The company has been providing innovative solutions in hardware and manufacturing for over 25 years.
Innovative Components was founded by Mike O’Connor in 1993. “I started the company because a knob fell off of my lawn mower; it got lost in the tall grass, and I ran over it and ruined both the knob and the lawn mower blade ,” he says. “So I thought to myself, ‘Why can’t they make knobs that don’t vibrate loose and fall off?’” The next day O’Connor came up with a design for a better knob. He quickly began designing various knobs and other components, utilizing subcontractors to manufacture them and soon founded Innovative Components, Inc.
Since then, Innovative Components’ portfolio has grown to include over 10,000 unique products. The company serves over 1,800 customers and employs 120 people in its two facilities in Schaumburg, Illinois, and Cartago, Costa Rica.
In 1993, O’Connor opened Innovative Components’ first manufacturing facility in Long Grove, Illinois. Since 1993, Innovative Components has moved and now operates its U.S. factory in a 30,000 square foot space in Schaumburg, Illinois. As O’Connor continued to grow the business over the years, he quickly discovered that he needed to come up with a solution to growing competition from cheap, overseas manufacturers. In 2006, O’Connor decided to move forward with owning and operating a manufacturing facility in Cartago, Costa Rica.
“The biggest evolution of the company was the creation of our factory in Costa Rica. We came to the conclusion that we had to protect ourselves against foreign competition, and we looked at all the available options. At that time, a lot of American companies were producing in China, India, or Mexico. None of those made sense to us for varying reasons, so we found Costa Rica,” says O’Connor.
Although Costa Rica isn’t widely recognized for its manufacturing capabilities, the country was an ideal fit for Innovative Components’ needs. The country boasts a 98 percent literacy rate through its free public education system, as well as a large percentage of English speakers. Costa Rica’s location is also ideal for importing products into the U.S. “It’s located in the Central Time Zone, as our Schaumburg facility is; and instead of the six-week journey for products from China to get to the U.S., it takes only five days. At the same time, we found that labor costs are about the same as those in the coastal areas of China.”
Most importantly, O’Connor says, Innovative Components was able to manage its own facility. “Most of our competitors will say they have a Chinese factory, but they actually don’t. They just have someone in China they can buy from. That’s not the same as owning the factory yourself and having your own employees there. They are not in control of what goes on in those factories,” O’Connor says. Owning and managing its own factory enables Innovative Components to ensure the quality of its products.
“Adding the factory in Costa Rica was a big step for us. We were a tiny company at the time, so it was a huge risk. However, it made us worldwide competitive on cost and also gave us complete control over the delivery, quality, and scheduling of our products, which we could not have achieved by simply importing parts from factories overseas. That’s an important distinction, and it’s one of the things that sets us apart from our competition,” O’Connor says.
Standing apart from the competition
Several years after opening the factory in Costa Rica, Innovative Components added a full tool room and a staff of twelve tool makers, who create all of the molds used to make its products. “To my knowledge, we’re the only knob company that owns its own tool making facility,” O’Connor says. However, like so many other companies, Innovative Components faced challenges when the 2008 recession hit.
“Every manufacturer in the U.S. was changed by the recession of 2008. It actually made us better, in that it forced us to embrace the tenets of lean manufacturing and become more efficient. It also reinforced our belief that, in order to win in our marketplace, we had to have the best equipment. We committed to that, and over the past two years we’ve spent more than $2 million replacing 13 out of the 19 machines in our fleet; so the majority of our fleet of injection molding presses are less than two years old. Most companies are using machines that are ten to twenty years old. We made that investment because the new machines are more efficient, and that’s necessary to be the best in the industry.”
Innovative Components has also invested in a robust new enterprise resource planning (ERP) system. “Every machine is connected to the computer system, and it’s tracking in real time. The schedule is updated every few seconds,” O’Connor says. “We get a tremendous amount of information out of this system, which we use to measure and give feedback, so all of our employees and suppliers are held accountable for their performance, and that makes everybody better,” he explains.
“We’re very much a data-driven company. We’re proud of our on-time delivery percentage and quality rating; our annual on-time delivery rate is 98.5 percent. Our defect rate is around 400 parts per million (PPM), so that’s about a 99.6 percent quality rating. The new ERP software has made us incredibly efficient. For example, now we’re making as many parts in one hour as we used to make in two hours, which is a huge cost savings. The software has given us total control over all the details of manufacturing.”
Innovative Components is also unique in its use of recycled plastics. More than 90 percent of the company’s products are made from recycled materials. “It gives a competitive advantage from a cost standpoint, but we don’t do it for a cost advantage; we do it because we think it’s the right thing to do. Our competitors don’t do it because it’s difficult and requires better equipment,” says O’Connor. “We have a great relationship with our plastics supplier, and they provide any technical expertise that we may be lacking, and they are willing and able to make joint sales calls with us in cases where the customer needs that technical information,” O’Connor shares.
“In general, I think we approach the industry differently than our competitors do. Our competitors are selling parts, and we’re selling solutions.” One of the advantages of having a facility in Costa Rica is the availability and affordability of highly educated engineers, allowing Innovative Components to retain a full staff of technical experts. The company employs a total of nine mechanical, industrial, materials, automation, and maintenance engineers. “We’re a small company, but we have the tools and resources that only much larger companies typically have. As a result, we approach our customers in a consultative manner, with a focus on solving their problems.”
Investing in the future of manufacturing
“There’s a lot of talk about the skills gap, the problem that there aren’t enough people with the technical skills required to fill the job openings in manufacturing companies. We decided that instead of complaining, we would do something about it,” says O’Connor. Through its outreach and apprenticeship programs, Innovative Components is cultivating a strong workforce, and is already reaping the benefits.
As a first step to attracting future employees, the company partnered with local schools to teach students and parents about careers in manufacturing. “First, we have to get the guidance counselors to recommend manufacturing as a career path, because if they don’t recommend that students take those classes, then students won’t be exposed to it. Then we have to get the students to believe that it’s a good opportunity, and get the parents to support it. We go into our local high schools on a regular basis, and we educate the guidance counselors and speak to the students. Without building that interest, an apprenticeship program is meaningless,” O’Connor says.
For high school graduates interested in a career in manufacturing, Innovative Components offers a rigorous apprenticeship experience that includes a full scholarship to earn an Associate’s Degree in Manufacturing Technology and a path to full-time employment.
The program begins in the summer after high school graduation, with two weeks of intensive training at the company’s facility in Costa Rica followed by a rotational program in the company’s Schaumburg facility, in which apprentices experience work in each of the company’s departments. Apprentices work part-time while attending college on an all-expenses-paid scholarship. Following the first year of college, apprentices spend a summer living and working in Costa Rica. This immersive experience provides hands-on work experience, develops maturity, and builds Spanish language proficiency. Upon graduation from the two-year Associate’s Degree program, apprentices are guaranteed a supervisory position within the company. “This program has made us believers in the potential of young people,” O’Connor says.
“A lot of companies have difficulty staying young and embracing new ideas. I’ve always felt that in order for a business to stay vibrant, you have to continue to bring in young talent in order to get fresh ideas and energy. So we concentrate on that, not just through our apprentice programs, but in our recruiting overall. And of the 120 employees we have, 76 percent are under the age of 35. That is very, very uncommon in the manufacturing business. Many of the problems other manufacturers are dealing with are related to an aging workforce, so that’s a significant competitive advantage.”
O’Connor is excited for the company’s future. “Our strategy is to stay true to what we do well,” he says. In the coming years, he anticipates that the company will expand its portfolio through product line extensions, while continuing to review and improve its designs. “We certainly feel that we can continue to maintain our high growth rate; we believe we can double our business over the next five years.”